The Health 202: Obamacare's 2018 rates are already baked

There’s a surging — and probably doomed — struggle on Capitol Hill to pass legislation easing hefty rate hikes in the 2018 Obamacare marketplaces. But that cake is already baked.

Less than two weeks remain before Healthcare.gov and a dozen state-run marketplaces open for business. The administration hasn’t released final prices, but expect them to look sizable and even as much as 30 or 40 percent higher in some states. A portion of the hikes — an average of 19 percent, according to the Kaiser Family Foundation — are because insurers are no longer getting extra payments (called cost-sharing reductions, or CSRs) to help them discount cost-sharing for the lowest-income customers.

Even if Congress finds a way to provide these subsidies, there’s no time left for insurers to adjust their premiums. Insurers were already in a state of flux over the past few months, forced to consider two scenarios as they submitted their 2018 rates to state and federal regulators.

Under Scenario A, the Trump administration continued the monthly CSR payments. Under Scenario B, President Trump halted them, as he’d been threatening all along. Now that Scenario B has unfolded, with the administration's announcement last week that it would immediately halt the monthly payments, insurers have to run with it regardless of what Congress does or doesn’t do. Enrollment for next year's marketplaces begins Nov. 1, after all.

Luckily for most of the insurers selling plans on Healthcare.gov, they’d assumed they wouldn’t get the payments next year and opted for a higher set of rates, Department of Health and Human Services spokeswoman Caitlin Oakley told me.

For the ones that didn’t, HHS is allowing them to refile their rates at the last minute. Two Montana insurers — Montana Health Co-Op and PacificSource — proposed a respective 24 percent and 11 percent rate increase on Monday, for example.

Oakley said the Centers for Medicare and Medicaid Services (which manages Healthcare.gov) is working with insurers that were required by their states to assume the CSRs would continue, resulting in premiums they think are too low.

“CMS is working on a case-by-case basis with those states where regulators explicitly required insurers to assume CSR payments would be made,” Oakley said.

And then there are the dozen states running their own marketplaces instead of using Healthcare.gov. Those states had taken a mixed approach to the CSR uncertainty. Some, including Colorado and Washington, had asked insurers to submit two sets of rates. Others, such as Connecticut, had instructed insurers to assume the payments would be terminated. Maryland went the opposite direction, telling insurers to assume the payments would continue.

California took a unique approach by requiring its mid-level “silver” plans to include a surcharge that would take the place of CSR payments should the federal government cut them off — a move that turned out to be smart.

“Our insurers do not have to file new rates because we had already figured out what to do in case CSRs were not funded,” Covered California spokeswoman Lizelda Lopez told me.

Don’t get me wrong. Congress could still improve future marketplaces by finding money for the CSRs, which is the only remaining way for insurers to get the payments. Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) introduced a bipartisan bill toward that end this week. The measure includes a provision opening the door for insurers to pay rebates back to consumers if they start receiving the payments at some point.

Ten state governors sent congressional leaders a letter last night urging them to pass the agreement. The signers include three Republicans -- Ohio Gov. John Kasich, Massachusetts Gov. Charlie Baker and Nevada Gov. Brian Sandoval -- and Alaska Gov. Bill Walker, an independent.

But it’s looking less and less likely by the hour that Republicans can unify to actually pass the Alexander-Murray bill, especially in the House. House Speaker Paul Ryan's (R-Wis.) press secretary, Doug Andres, told Axios yesterday that "the speaker does not see anything that changes his view that the Senate should keep its focus on repeal and replace of Obamacare." Senate Majority Leader Mitch McConnell hasn’t scheduled a vote, appearing noncommittal about the measure when Alexander and Murray announced it Tuesday.

President Trump has perplexed everyone this week with his mixed messages, alternately appearing to support the Alexander-Murray deal but then seeming to dismiss it as an undue “bailout” for insurers.

On Tuesday, at a joint news conference with the prime minister of Greece, Trump had sounded positive about the plan. “Yes, we have been involved, and this is a short-term deal,” Trump said. Then, after speaking at the Heritage Foundation that evening, the president tweeted this:

Any increase in ObamaCare premiums is the fault of the Democrats for giving us a "product" that never had a chance of working.

--Is that the sound of Alexander banging his head against a wall? The senator insisted the president had personally asked him to work on the deal with Murray, saying he gives Trump "full credit" for it. Alexander said the president even expressed openness to it in a phone call Wednesday morning.

“He told me that he wanted to encourage me but that he will review it, as I would expect a president to do,” Alexander said, per my colleagues Sean Sullivan and Juliet Eilperin. “He may want to add something to it. It may come up as part of the end-of-the-year negotiations. We’ll see.”

From NBC News' Benjy Sarlin:

Lamar Alexander to press, per @GarrettHaake: "The president called me 10 days ago and asked me to work with Senator Murray to do this"

AHH: Nineteen states have sued the Trump administration to force it to keep making the CSR payments. They could soon get an initial decision; a federal judge said yesterday he'd like to rule next week on their request for a temporary restraining order requiring the government to continue the payments,Politico reports.

A lawyer for the states, Greg Brown, had argued that the issue is urgent because failing to make the payments to insurance companies on time will disrupt the insurance markets. “It injects a large amount of chaos into the health care system” said Brown, who is a California deputy solicitor general. “The chaos and disruption is going to potentially cause insurers to raise their rates and potentially drop out of certain markets."

But government lawyers noted that the law doesn’t actually require that the payments be made on any specific schedule, but simply that they be “periodic and timely.” Even if the judge ordered the payments to continue, “the government would still have discretion about when to make the payments — it could be quarterly, it could be biannually,” DOJ lawyer James Burnham said.

OOF: A slight majority of voters back a key component of Trump’s executive order last week to promote the sale of health insurance that is cheaper but leaner than coverage sold under ACA regulations, according to a Morning Consult poll. Fifty-two percent of voters said they support the plan to make it easier for small businesses to band together in associations to sponsor low-cost, less comprehensive health care coverage across state lines, while 30 percent said they oppose the policy. Yet approval still fell mostly along partisan lines. Seventy-nine percent of GOP voters said they approved of Trump’s action, compared to 49 percent of independents and 31 percent of Democrats.

OUCH: Yesterday a federal judge ordered the government to allow an undocumented 17-year-old to have an abortion, after saying she was “astounded” the Trump administration was trying to prevent the procedure, The Post's Maria Sacchetti reports.

The Justice Department had signaled that the teenager -- who crossed the border from Mexico illegally last month -- didn't have a constitutional right to an elective abortion while in federal custody. But U.S. District Judge Tanya Chutkan, an Obama nominee, said the government appeared to be presenting the teenager with two options: Voluntarily return to a nation she fled to procure an abortion, or carry an unwanted pregnancy to term.

“I am astounded by that position,” Chutkan said in a 40-minute hearing. She ordered the government to transport the teenager to have the procedure — or allow her guardian to transport her — “promptly and without delay.” Failing to comply might result in a finding of contempt, she warned DOJ.

"The case of the Central American 17-year-old, identified in court papers as Jane Doe, has drawn national attention," Maria writes. "Democrats in Congress expressed opposition to the government’s stance, while Texas and seven other states filed a friend-of-the-court brief supporting it....Court filings make clear that the government is trying to prevent minors in its custody from having abortions, a departure from U.S. practice under Obama."

MALPRACTICE

--Have insurance companies made a "fortune" on Obamacare, as Trump has recently claimed? The president defended his decision to end CSR payments by pointing to the gain in stock prices for health-insurance companies. Here's what he said:

“We want the money to go to the people. We don't want the money to go into the pockets. I have a list here where it talks about the insurance companies. … Anthem, big company, from the beginning of Obamacare, 270 percent increase in their stock price. Humana, 420 percent up. Aetna, 470 percent increase from Obamacare. Cigna, 480 percent increase since Obamacare. The insurance companies have absolutely taken advantage of this country and our people. And I stopped it by stopping the CSRs.”--Trump, responding to a question from Mike Sacks of E.W. Scripps, Oct. 17, 2017

“I don't want to make the insurance companies rich. If you look at their stock price over the last number of years — take a look at what's happened with those insurance companies — they're making a fortune by getting that kind of money.”--Trump, remarks on the White House lawn, Oct. 13, 2017

But data on file with the government shows that the president is flat wrong, The Post's fact-checker Glenn Kessler reports.

First, CSRs are not a bailout for insurance companies. Glenn has explained this before. The ACA required companies to discount deductibles and co-pays for lower-income Americans with the understanding that the federal government would make up the difference. Because of a drafting error, the text failed to explicitly say that appropriations for the CSRs would happen automatically.

So what about Trump's claim that insurers made a lot of money off Obamacare enrollees? Here's the reality: Insurance companies are not reaping billions off the Obamacare exchanges; they are losing billions.

In response to Trump's claim, a White House official pointed to a report in Axios that included a chart of the profits of the big five for-profit insurers, Aetna, Anthem, Cigna, Humana and UnitedHealth Group. But instead of gains topping 400 percent, as claimed by Trump, the stocks gained about 200 percent (Anthem), 135 percent (Humana), 130 percent (Aetna) and Cigna (120 percent) since 2014. Still, that’s more impressive than the gain in the Standard & Poor’s 500 index in that period — about 40 percent.

But these companies are making profits for their shareholders despite Obamacare not because of it. This simple fact is documented in reports produced by Wall Street analysts and numbers provided by the companies that are on file with the government. Data kept with the Centers for Medicare and Medicaid Services show that in 2015 issuers of qualified health plans — health-insurance plans for the exchanges — lost nearly $6.6 billion, or about $495 per member, in the Obamacare exchanges. This was an increase from $1.8 billion in 2014, or $223 per member. That’s more than $8 billion in insurance-company losses in the first two years of the exchanges.

STATE SCAN

(Photo by Joe Raedle/Getty Images)

--Medicaid enrollment growth has slowed after three years of increased sign-ups due to most states expanding coverage under the ACA. Growth slowed to 2.7 percent nationally in fiscal year 2017, down from 3.9 percent the year before, according to a report released this morning by the Kaiser Family Foundation.

Yet overall Medicaid spending is growing slightly faster than last year, up to 3.9 percent from 3.5 percent in 2016. States reported that increase reflected higher spending on such things as prescription drugs and long-term care services. And states will have to kick in more next year. Their share of Medicaid spending grew by 3.5 this year, but is expected to go up to 6 percent in 2018 as extra federal contributions for expanded Medicaid programs start to phase down.